George Colony's Blog: The Counterintuitive CEO

This blog, written by Forrester CEO George Colony, contains ideas, observations, and analyses to help drive the success of other CEOs. George’s goal is to assist today’s company leaders in forming unique approaches to the challenges they face.George’s bio | George on Twitter

At Forrester's CIO/CMO Summit in Napa Valley this week I moderated a panel of executives from three digital companies. The panelists were: Liz Crawford, the CTO at Birchbox; Allan Jones, the CMO of ZipRecruiter, and Blair Ethington, the VP of Marketing and Brands at Crowdstar. The audience was primarily large company CIOs and CMOs. My panel was a chance for them to see the other side of the tracks -- how digitally-native companies are organizing, behaving, recruiting, developing, and thinking. Here are the lessons.

Beautiful, but a niche product. I estimate that only 10% of the 250 million worldwide iPhone users will buy the Apple Watch. That's approximately $8-$12 billion of revenue for Apple -- not bad, but hardly the "breakthrough" or "new chapter" claimed from the Cupertino stage.

Why? 1) For many, two devices on the body are unnecessary. Pulling the iPhone out of a pocket or purse is fine -- most will not need another device to access payments or track health. 2) What we wear is a deeply cultural and emotional choice. A watch, like a shirt, shoes, tattoo, skirt, jewelry, contains complex and carefully crafted information about the wearer -- and these messages are continually massaged and warped by the often inexplicable forces of fashion. And no amount of "Milanese" and "buckle" luxury watchband talk can obscure this issue. 3) Wearing a radio directly on the body spooks many people who rationally or irrationally fear the health risks of close electromagnetic radiation. 4) It's expensive -- and not covered by carrier subsidies. It's $600 for the whole package of a subsidized $200 iPhone and the $400 Watch. 5) The form factor has fixed limits -- the small screen obviates advertising, electronics fatten the case, big fingers obscure the screen when touching. For many, the form will be seen as simply ugly. 6) Having to charge yet another device every day will be a bridge too far for many.

Stride for stride with Forrester, others have been doing excellent work describing the emergence of the empowered customer. Here's a very short list of notables:

1) Gavin Newsom, the Lieutenant Governor of California, describes how empowered customers (citizens in this context) will change society when they flex their newfound muscles in the political arena. Citizenvilleshows how the populace's power will not be restricted to the commercial world.

2) Jim Blasingame has written a prescient book describing how the age of the customer will impact small businesses and what they should be doing to prepare for those changes. Here's a great quote from Jim: "It's okay to fall in love with what you do, but it's not okay to fall in love with how you do it."

In addition to managing the IT agendas of their companies, CIOs must build a second agenda of Business Technology (systems, technology, and processes to win, serve, and retain customers). The IT agenda focuses internally on supply chains, financial systems, and administrative technology. These are all critical -- most corporations would stop in minutes without IT. But as empowered and digital customers demand more, BT will emerge to concentrate on technologies -- CRM, systems of engagement, customer apps, customer insight, digital customer service as examples -- that will enhance customer experience.

Forrester does not believe that a Chief Digital Officer will arrive on a white horse to run BT, and we also do not agree with the trendy assertion that marketing is going to be in charge of all customer technology. Because of the close synergy between the IT and BT agendas, we believe that the CIO and his or her staff must adroitly manage both. And as unnatural as it might seem in many organizations, the CIO must execute on the BT agenda in concert with the CMO and business unit leaders. A go-it-alone approach will create havoc and unhappy customers.

Microsoft's new CEO, Satya Nadella, must take three actions to make the company relevant in the Age of the Customer:

1) Attack mobile. Customers are undergoing a mobile mind shift -- an expectation that they can get any information or service on any device at any time wherever they may be. Nadella must establish Microsoft as the third mobile ecosystem, legitimately competing with the formidable franchises of Apple (iOS) and Google (Android). Amazon, with its profit-free business model, will spend unlimited dollars to win the third spot. And a hoard of challengers, from Samsung to Dell to Lenovo will generate confusion and a shower of Hail Mary products in desperate efforts to gain a foothold. Nadella must flawlessly execute in a space that is unfamiliar (he's a cloud guy) and unforgiving. The good news is that Microsoft has a rich history of building powerful ecosystems (e.g., Windows, .NET). But this time around it must approach the market as a challenger, not as the dominant player. Which brings us to...

1) I always go to Davos with a quick poll to ask my fellow attendees. This year my question was: "Is Edward Snowden a traitor or a hero?" 32 attendees voted "traitor" while 21 voted "hero." Europeans and young people tended more to the "hero" side. Everyone involved with the U.S. government (senators, congressmen, ex- or current administration officials) unanimously voted "traitor."

2) When I asked Marissa Mayer of Yahoo what she would ask President Obama to do to regarding security and privacy, she had a simple answer -- "More transparency."

3) When I asked my technology panel how much of a citizen's digital information he or she could expect to be private in the future, the answer was "90%." That would mean that 10% of your emails would be viewable by a third party -- but you wouldn't know which 10%. I'm not sure customers would tolerate these levels.

We are in the age of the customer, where technology is dramatically accelerating the shift in power from institutions to individuals, forcing organizations to be with their customers as they move through time and space.

My big takeaways from the panel:

The age of the customer underpins what’s coming next in tech: context-driven systems, the Internet of everything, and customer-centric software.

Much of the Internet of everything will focus on personal care and health.

I am moderating a panel at the World Economic Forum in Davos in two weeks. The title is: "The New Digital Context -- What societal, economic and technological forces are shaping the digital landscape?"

As we all head off into the New Year, I wanted to look back at what I consider to be the "Best of..." for 2013. Note that the following is based entirely on my personal opinions -- it is not grounded in Forrester's research or formal positions. Here's what I liked from 2013, in no particular order...

One: My favorite book of the year is 4/5s bummer and 1/5th hopeful. Erik Brynjolfsson and Andrew McAfees' Race Against the Machine outlines how prodigiously improving digital technology is going to put millions out of work, from truck drivers to radiologists. But the authors end on an up note: human beings cannot win the race against the machines, but they can excel if they race with the machines -- that is, use digital to be better doctors, geologists, factory workers, or chefs. There is hope for mankind...